Feds approve plan to restore kids' health coverage

Hospital groups, state to reopen enrollment in KidsCare

The state will add nearly 22,000 low-income Arizona children to its health-insurance program under a deal that won federal approval Friday.

The deal also will provide three large hospital groups with federal funding to care for uninsured patients.

In total, the new agreement brings in more than $400million in local and federal money to cover low-income, uninsured Arizonans through January 2014. No new state funding is involved.

About 100,000 people have lost coverage in the past year because of cuts to the Arizona Health Care Cost Containment System, the state's Medicaid program, to help close state budget deficits. At the same time, hospital charity-care budgets have exploded as they treat more uninsured people.

Phoenix Children's Hospital, Maricopa Integrated Health System and the University of Arizona Health Network will contribute roughly $125million combined this year and next to provide health care for uninsured patients and reopen KidsCare insurance coverage for 21,700 children.

The local funding will bring in about $278million a year in matching federal funds for the hospital groups and KidsCare.

More than 100,000 children have been put on a waiting list since Arizona froze enrollment in KidsCare in January 2010. Beginning Monday, state health officials will notify families who have been on the waiting list the longest and help them apply for coverage, which will begin May 1.

AHCCCS has asked community health clinics to help find families on the waiting list, said Tara McCollum Plese of the Arizona Association of Community Health Centers.

She said the new funding will buoy the entire health-care system, not just services for the poor. As hospitals and clinics have seen more uninsured patients, it has led to longer waits and leaner operations, which affect all patients, she said.

"It's really hindering the ability to serve everybody who needs to be served," McCollum Plese said. "These hospitals have to find a way to sustain themselves."

Gov. Jan Brewer and the hospitals pitched the plan in November as a way to qualify for additional federal funding for the uninsured and cover children under KidsCare, which now insures about 11,600 children, compared with more than 40,000 at its peak.

The Centers for Medicare and Medicaid Services rejected an earlier proposal, which didn't involve reopening KidsCare. But on Friday, CMS Director Cindy Mann said the new plan was acceptable because of the expanded coverage to the children of low-income families.

"With these changes, Arizona and CMS are helping vulnerable populations receive the care they need," Mann said in a statement.

The state will offer the new KidsCare program until January 2014, when provisions of federal health-care reform will expand Medicaid coverage.

Each hospital will contribute to the "safety-net care pool" based on a complicated formula that state, federal and hospital officials are still devising. It's based on how much charity care and AHCCCS care the health-care facilities provide.

About two-thirds of the patients seen at Maricopa Medical Center qualify for AHCCCS. The county's safety-net hospital has seen its charity-care budget nearly double in the past year, said Betsey Bayless, CEO of Maricopa Integrated Health System.

"This is extraordinarily good news for us," Bayless said. "When (KidsCare) was cut off, many children suffered as a result."

KidsCare provides coverage to families earning up to 200 percent of the federal poverty level, or $37,000 for a family of three. This new program, called KidsCare II, will apply to families with incomes below 175 percent of poverty, or about $32,400 for a family of three. Families pay a sliding-scale copay of $10 to $70 a month depending on their incomes.

Brewer thanked CMS for approving the plan and applauded the hospital groups "for their ingenuity."

"This is the kind of innovative collaboration that can help us address our most urgent health needs without blowing a hole in the state budget," the governor said in a statement.

Legislators enabled the safety-net proposal with legislation last year that allows certain hospital districts to pay for Arizona's share of health programs, triggering matching federal dollars.